Module MO010

Organizational Design


Module authors

Stuart Wigham

Birmingham City Council



Pawan Budhwar

Aston Business School


Learning objectives

After you have studied this module, you will be able to:

  • define organization design and/or organization structures;
  • discuss the importance of strategic organization design;
  • describe the key approaches to designing an organization;
  • understand the interdependencies of the different organization design and structural choices;
  • use a systems organization design model;
  • explain the organization design techniques available, how these can be used including the legal and technical issues related;
  • evaluate the utility of a systems model.

Chapter 1: Introduction
1.1 Conditions for organizing
1.2 Organization as systems
1.3 Organization structures
1.4 Evaluating the design of the organization
1.5 An overview of organization design

Chapter 2: Conditions for organizing
2.1 Location
2.2 Scale and Size
2.3 Geography
2.4 Complexity

Chapter 3: Organizations as systems
3.1 What are organization systems models?
3.2 What models are in the common use today?
3.3 How to use a systems model?
3.4 What are the important considerations for choosing a model?

Chapter 4: Organizations as structures
4.1 What is an organization structure?
4.2 What are the common structures in use today?
4.3 What are the important considerations for adopting a structural type?

Chapter 5: Organization Design Techniques
5.1 Whole scale/system engagement
5.2 Socio-technical systems approach
5.3 Process improvement approaches
5.4 Layers and spans of control
5.5 Requisite levels
5.6 Project management of a new OD implementation
5.7 Governance issues

Workload units 3
Reading extract Organizational Design




Why Open School of Management believes that organization design is important

Organizational design is a guided and formal process that is designed to integrate people, technology, and information. The process is designed to match the goals of the organization to the outcome that is expected by or is desirable to the organization. Organizational design is based upon the evaluation of the collective input of all of its members. This will determine an organization's success.

Internal change is a part of organizational design and can be executed under the guidance of an external facilitator. Managers and members will work together to determine the needs of an organization. The facilitator will monitor the process and verify that a systematic process is followed. The facilitator will also encourage creative thinking.

Part of understanding organizational design is understanding how organizations have been formed historically. From scientific management to the development of bureaus and departments, organizational design has been the foundation for developing this aspect of business. The processes can be used in accounting, sales, or manufacturing. Even governments, churches, schools, and fraternities have used these basic principles to ensure their organizations operate efficiently.

This method of design involves observing the behaviors of different groups and determining how to yield certain outcomes. In general, it assumes that each group possesses a different culture. How this will affect the overall organizational design will depend on the organization and the desired outcome. For instance, different cultures in a manufacturing environment will affect an organization differently than a variety of cultures in an engineering environment. No one design will be applicable to every culture.

Organizational design should always keep the purpose in mind in order to ensure that everything operates in the way it should. The methodologies will be used to unite dissimilar groups. What may be dysfunctional for one group may actually be effective for another group. This is why discernment is necessary to ensure that all parties get what they want in organizational design.

To be successful in organizational design, you must create a set of decision guidelines and allow members of the team to choose the best practices and actions to achieve the desired outcome. The strategy is derived from a set of clear and concise statements of purpose and vision. This will also include the basic philosophy of an organization. The intent of the organization is always one of the most important aspects of the strategy, which is why it's constantly reiterated.

Part of strategy creation is planning. Organization is another aspect of the strategy that includes connecting and organizing people in meaningful and purposeful ways. This may involve connecting people with the right information and technology. The organizational structure will define formal relationships and their roles and responsibilities.

Organizations should be designed to overcome any individual limitations. Organizational design should help people interact with one another in the most efficient manner to accomplish a goal. If the design is stellar, it will result in achievement within an organization. The process will usually consider the organization's strategy, vision, and purpose. Individual decision-making and responsibility are also a part of an organization's strategy and will help them accomplish meaningful work.


Why study organization design?

If an organization does not follow a proper strategic design, they will have significant inefficiencies. In business and in today's managerial environment, inefficiencies could destroy your business. If your product is not produced as fast or better than the competition, your business will not thrive. You should make every effort to ensure that the business environment is conducive to helping your business succeed. Otherwise, the company will not survive long term.

Management is often studied ad nauseam to help organizations understand how to manage their team effectively to keep morale high and productivity even higher. This cannot be accomplished without careful evaluation of the business. Evaluate the business and apply best practices in the industry to achieve exceptional results.

If businesses do not evaluate their managerial environment and business practices, they are often not maximizing their full potential. This is why it is important for companies to continually evaluate their business practices to ensure that they will remain competitive in the business world.


Module overview

In order be successful in this field, you must master certain skills. Upon successful completion of the coursework, you should be able to provide the definition of organization design and discuss the importance of strategic organization design. You should also be able to describe the key approaches required to design an organization. You should also be able to understand the different interdependencies of organizational design and structural choices.

You should also know how to choose a system's organization design model and explain the organizational design techniques available and how they can be used in the organization. It is also important to master the ability to evaluate the utility of a system.


Return to Organization Management (MO modules).